Home Flipping Makes a Comeback in Many US Housing Markets
Home prices are on the rise. This month’s Case-Shiller home price index continues to show home value appreciation across the country, specifically markets in the West and Pacific Northwest. Rising home values and low mortgage rates are spurring a new house “flipping” trend. According to Realtor.com, 193,000 single family homes were flipped in 2016.
Some markets are more conducive to flipping opportunities than others. MarketWatch reports that some of the most profitable metros include San Jose, CA, Denver, CO, Los Angeles Ca, Sacramento, CA, Seattle, WA, Philadelphia, PA, New Orleans, LA, and Boston, MA. On average, homeowners who occupied their home for at least 7.5 years, had a $40,000 or 24% profit upon selling their home.
With foreclosure rates dropping every year, flippers are no longer able to go to foreclosure auctions and take their pick of an abundance of low-priced homes. Instead, ATTOM Senior Vice President Daren Blomquist explains, “They’re going into the neighborhoods and looking for the homes that most buyers would pass over [...] smaller homes built in the 60s or 70s that don't have the modern aesthetics.” These homes tend to cost more than the typical “bargain-basement foreclosures” and could be suitable starter homes for first-time home buyers, especially in a market with limited inventory.
While this home price appreciation trend is leading to positive gains amongst flippers and homeowners, it is also stifling the first-time home buyer market. Many younger home buyers, like millennials, are getting priced out of housing markets despite low mortgage rates, because rising home prices are making it difficult to afford a down payment. By ranking metros based on job availability and home affordability, Realtor.com suggests the top three destinations for millennials are Miami, FL, Orlando, FL, and Salt Lake City, Utah.
Sources: MarketWatch, Realtor.com